Need real financials?

8.2 Projected Profit and Loss

The most important assumption in the Projected Profit and Loss statement is the gross margin. Although it doesn't jump drastically in the first year, over time the restaurant will develop its customer base and reputation and the growth will pick up more rapidly towards the fourth and fifth years of business.

Month-by-month assumptions for profit and loss are included in the appendix.

Need actual charts?

We recommend using LivePlan as the easiest way to create graphs for your own business plan.

8.3 Projected Cash Flow

The cash flow depends on assumptions for inventory turnover, payment days, and accounts receivable management. Our projected same-day collections is critical, and is reasonable and customary in the restaurant industry. We do not expect to need significant additional support even when we reach the less profitable months, as they are expected. The first six months of PHC openings have shown huge sales volumes. We expect this volume, however our projections do not reflect this high volume. We have done this in the event there is normal sales during the first six months.

Month-by-month assumptions for projected cash flow are included in the appendix.

Need actual charts?

We recommend using LivePlan as the easiest way to create graphs for your own business plan.

8.4 Projected Balance Sheet

The projected Balance Sheet is quite solid. We do not anticipate difficulty meeting our debt obligations providing that we achieve our specific goals.

Pro Forma Balance Sheet

Year 1

Year 2

Year 3

Assets

Current Assets

Cash

$211,961

$261,723

$343,149

Inventory

$39,382

$44,187

$45,071

Other Current Assets

$10,000

$10,000

$10,000

Total Current Assets

$261,344

$315,909

$398,219

Long-term Assets

Long-term Assets

$547,600

$547,600

$547,600

Accumulated Depreciation

$66,144

$132,288

$198,432

Total Long-term Assets

$481,456

$415,312

$349,168

Total Assets

$742,800

$731,221

$747,387

Liabilities and Capital

Year 1

Year 2

Year 3

Current Liabilities

Accounts Payable

$91,595

$93,462

$95,250

Current Borrowing

$0

$0

$0

Other Current Liabilities

$67,500

$60,000

$52,500

Subtotal Current Liabilities

$159,095

$153,462

$147,750

Long-term Liabilities

$573,336

$546,672

$520,008

Total Liabilities

$732,431

$700,134

$667,758

Paid-in Capital

$0

$0

$0

Retained Earnings

($17,400)

$10,369

$31,088

Earnings

$27,769

$20,719

$48,542

Total Capital

$10,369

$31,088

$79,629

Total Liabilities and Capital

$742,800

$731,221

$747,387

Net Worth

$10,369

$31,088

$79,629

8.5 Business Ratios

We expect our net profit margin, and gross margin to increase steadily over the three-years. Our net working capital will increase by year three, proving that we have the cash flows to remain a going concern. The following table shows these important financial ratios. Industry profile ratios based on the Standard Industrial Classification (SIC) code 5812.0108, Italian restaurant, are shown for comparison.

Ratio Analysis

Year 1

Year 2

Year 3

Industry Profile

Sales Growth

0.00%

3.97%

3.97%

6.96%

Percent of Total Assets

Inventory

5.30%

6.04%

6.03%

3.90%

Other Current Assets

1.35%

1.37%

1.34%

28.39%

Total Current Assets

35.18%

43.20%

53.28%

37.68%

Long-term Assets

64.82%

56.80%

46.72%

62.32%

Total Assets

100.00%

100.00%

100.00%

100.00%

Current Liabilities

21.42%

20.99%

19.77%

19.17%

Long-term Liabilities

77.19%

74.76%

69.58%

29.21%

Total Liabilities

98.60%

95.75%

89.35%

48.38%

Net Worth

1.40%

4.25%

10.65%

51.62%

Percent of Sales

Sales

100.00%

100.00%

100.00%

100.00%

Gross Margin

74.96%

75.43%

75.90%

59.31%

Selling, General & Administrative Expenses

72.17%

73.20%

72.15%

39.09%

Advertising Expenses

0.00%

0.00%

0.00%

2.75%

Profit Before Interest and Taxes

5.45%

4.55%

6.21%

1.59%

Main Ratios

Current

1.64

2.06

2.70

1.26

Quick

1.40

1.77

2.39

0.87

Total Debt to Total Assets

98.60%

95.75%

89.35%

54.38%

Pre-tax Return on Net Worth

343.69%

84.68%

78.18%

3.27%

Pre-tax Return on Assets

4.80%

3.60%

8.33%

7.17%

Additional Ratios

Year 1

Year 2

Year 3

Net Profit Margin

1.65%

1.19%

2.67%

n.a

Return on Equity

267.81%

66.65%

60.96%

n.a

Activity Ratios

Inventory Turnover

10.91

10.28

9.82

n.a

Accounts Payable Turnover

12.50

12.17

12.17

n.a

Payment Days

27

30

30

n.a

Total Asset Turnover

2.26

2.39

2.43

n.a

Debt Ratios

Debt to Net Worth

70.64

22.52

8.39

n.a

Current Liab. to Liab.

0.22

0.22

0.22

n.a

Liquidity Ratios

Net Working Capital

$102,249

$162,448

$250,469

n.a

Interest Coverage

1.64

1.49

2.23

n.a

Additional Ratios

Assets to Sales

0.44

0.42

0.41

n.a

Current Debt/Total Assets

21%

21%

20%

n.a

Acid Test

1.40

1.77

2.39

n.a

Sales/Net Worth

162.14

56.23

22.82

n.a

Dividend Payout

0.00

0.00

0.00

n.a

Need real financials?

We recommend using LivePlan as the easiest way to create automatic financials for your own business plan.